the directive 92/100/eec on rental and lending right: accomplishments and problems

成都市中级人民法院民三庭    张志军

part i      introduction

on 19 november 1992, the council of ministers of the european communities adopted council directive 92/100/eec on rental and lending right and on certain rights related to copyright.[1] the ec member states were obliged to take the necessary measures for the transposition of the directive into their national law before 1 july 1994. the aim of the directive is to respond to the new technologies and, in particular, to deal with the problems of copyright piracy. since the directive was designed to harmonize the different levels of legal protection for the rental and lending right, certain related rights existing in the community, it is worth inquiring into the main provisions and issues in connection with these, in order to find the achievements and problems of the directive.

this essay gives a brief account of some of the issues based on the directive. the second part briefly looks at the legislative backdrop for the directive, which is dealt with by the recitals of the directive. the third part exams the main provisions within the directive in an attempt to identify some accomplishments. the fourth part tries to deal with possible legislative loopholes of the directive, among others, the vagueness of some provisions, which may hinder the enforcement of the directive at the eu level. the last part concludes the essay.

part ii the directive: an imperative task

the recital 1 to recital 9 of the directive has clearly spelled out various factors, which have rendered the directive an imperative task.

firstly, the different legal protection provided by the national laws and practices for the rental and lending right as well as related rights has became the serious sources of barriers to trade and distortion of competition. as a result, it could be against the objective of the single market within ec. for example, in case warner bros v. christiansen,[2] the question that the court had to answer was whether the rental right holder in denmark, being entitled the right to authorize rental of video cassette within denmark, could prevent a person who purchased a video in a member state where rental was restricted from the exploiting the imported cassette for commercial rental purposes. this case is one of the vivid demonstrations of problems from the point of the function of the internal market.

secondly, the popularity of piracy in some member states became a serious threat. in the commission’s green paper, piracy was defined as the unauthorized reproduction of works protected by copyright or allied right for commercial purposes as well as all subsequent commercial dealing in such reproductions. this definition covers copyright, moral right and neighbouring right. in order to fight against piracy, rental and lending right, related rights need to be established to protect the authors, performers and producers of phonograms and films.[3] the protections are also considered to be of fundamental importance for the community’s economic and cultural development.

thirdly, the economic development makes the new forms of exploitations realistic, for example, sound recording on compact disc could until recently only be copied on to tape using ordinary analogue recording equipment, but then advent of the digital audio tape means the digital recording can be copied in digital form.[4] therefore, copyright in related rights protection must be adapted to it. furthermore, the adequate legal protection can increase the income of the authors and performers from the rights established in the directive, which in return can enhance the creativity of the authors and performers.

lastly, the establishment of a harmonized legal protection within the community under a minimum level of rights should make it easier for the pursuit of the creative, artistic and entrepreneurial activities[5].

part iii accomplishments

1.      rental and lending right

rental and lending at the eu level

under the directive, rental means making available for use for a limited period of time for direct or indirect profit-making purposes, while lending means making available for use for a limited period of time through establishments accessible to the public, but not for direct or indirect profit-making purposes.[6] it can be seen from the definition that the terms “rental” and “lending” are defined in accordance with whether the activity is for profit-making purposes or not. the wording “ not for direct profit-making” refers to particular kinds of lending libraries, which are treated as ordinary public libraries. these libraries are mostly held by major business, typically, these libraries are restricted at certain time to employees, while at other time the libraries are open to the general public in the same way as public libraries. the words “for a limited period of time” are to differ the definition of rental and lending from the definition of sale, because the forms of sale can be made available for an unlimited period of time.[7]

traditionally, the owner of the copyright would not have a separate intellectual property right controlling the rental and lending of copyright material. when the copyright has been converted into a product, it may be free for the purchaser to rent or lend.[8] clearly, the commercial rent is an exploitation of the item. since the copyright owner may not share the interests with the purchaser for the rental or lending, the royalties and profits of the copyright owner can be certainly reduced. thus, in the absence of any substantial rental and lending provisions in any of the member states, the european union took the initiative to introduce these rights in a harmonized way[9].

wide coverage of the rental and lending right

based on the directive, member states are obliged to provide a right to authorize or prohibit the rental and lending of both originals and of copies of copyright work and other subject matter[10]. the exclusive right is entitled to the authors, performers, phonogram producers and producers of films.[11] at the same time, authors and performers enjoy an unwaivable right to equitable remuneration for the transfer of the rental right.[12] in addition, a new right is created which the principal director of a film is deemed to be its author or one of its authors although member states may also provide for others to be considered to be co-authors.[13]

transfer of the rental right

the transfer of the rental and lending right is mainly dealt with under article 2(4), (5), (6), the transfer of rental right is emphasized. article 2(4) provides that the right created by the directive may be transferred, assigned or subject to the granting of contractual licences. an assignment involves the disposal of copyright, while a licence does not involve a transfer of the copyright in the work, the owner of the copyright simply grand permission to the licensee to do certain acts in case.[14] these are the two forms of contracts concerning the transfer of the rental right. article 2(5) is a mandatory provision containing a presumption of transfer of rental right from the performers to the film producer, accordingly, in a contract concerning film production concluded by performers with a film producer, the performers will be presumed to have transferred their rental right subject to contractual clauses to the contrary.[15]. the rule of presumption plays an important role in regard to the contracts of film production, when the film is made, the performers will normally go individually, it might be rather impractical that the film can only be exploited through rental after the authorization of each contributor have been obtained. therefore, the rule of presumption of transfer can successfully overcome the problems that arise when too many persons potentially possess rental rights in relation to a single work[16].

unwaivable right to equitable remuneration

for the higher level of bargaining power of the producer, the rule of presumption of transfer may be to the detriment of the author and performers who would hardly be able to secure a proper remuneration for the transfer of their rental rights in the production agreement[17]. in order to protect the weaker in the contract of transfer of rental right, the directive introduce a rule that authors and performers remain entitled to an equitable remuneration for the rental, even after the transfer of their right.

to implement the right to equitable remuneration, the directive offers several options; collecting society administration is one of the possibilities. it is a system whereby certain rights are administrated for the benefit of authors and /or copyright owners. the organizations that administrate the rights are empowered to authorize various specified uses of their member’s works, normally by way of a licence.[18] this option can be convenient for the copyright owner to collect minimum fee on very occasion, at the same time, it is easy for the users to rent the copyright works .it is considered that the directive is in favour of this method, since both recital 15 and article 4 mentions specifically this possibility to implement the right to remuneration, although there are still other choices, for example, authors and performers may exercise their remuneration rights in the context collective agreements between their trade union or individual employers or individually assert their remuneration right against the producer in an individual contract.[19]

public lending right with flexibility

the lending right applies in non-commercial situation as defined above. it may be a great threat to the normal activities of the public library because the exclusive public lending right may prevent the use of certain works. to balance the interest between the exclusive lending right and the promotion of culture played by the public libraries, a derogation from the exclusive lending right is created, in such situation, remuneration for authors must be introduced, which should be freely determined in accordance with culture objectives.[20] more flexibly, member states are required to introduce a remuneration for authors at least, when they do not apply exclusive lending right relating to phonograms, film and computer programs. however, member states may exempt certain categories of establishments from the payment of remuneration for public lending.[21] as to the exemption, one question can be asked whether it is possible for member states to exclude all establishments from the payment? by looking at the provision itself, this derogation can only be applied to one or several but not all categories of establishments. this is the reason why the word ‘certain’ is used in the provision, even more if it could be explained that all categories of establishments could be exempted, then the public lending right would be undermined since even authors could not obtain remuneration for public lending.

2.      rights related to copyright

related rights at the eu level

traditional copyright law protected the created form but it did not protect individual performers or the rights of recording companies in relation to those performances as such. as a result, separate protection for those additional rights had to be created. thus, copyright specialists have drawn a difference between the rights of creators of works (authors, artists, composers etc) and the rights of these performing the works or commercially exploiting them through technology. these rights are termed as neighbouring rights.[22]the term “rights related to copyright” is preferred to the more commonly used term “neighbouring rights.”[23] before the directive was introduced, some member states did not recognize rights related to copyright at all, while others granted rights that did not cover all neighbouring rights.[24] in order to harmonize the different legal protection on rights related to copyright, chapter ii article 6, 7,8,9,10 of the directive provides related rights to performers, phonogram producers, producers of the first fixations of films and broadcasting organizations. the related rights covered by the directive, are the fixation, reproduction, broadcasting and communication to the public, and distribution rights. in addition, under the directive article 10, the related rights may be limited by the member states for private and teaching use, as well as for the reporting of current events.

performers’ related rights

for performers, the directive obliges member states to provide that performers have the exclusive right to authorise or prohibit the fixation and direct or indirect reproduction of their performances according to article 6(1) and article 7. the fixation of a performance means its first fixation on a device from which the performance can repeatedly be reproduced for perception.[25] under article 8, they enjoy the right to authorise or prohibit the broadcasting by wireless means and the communication to the public, the right to a single equitable remuneration of the broadcast. furthermore, according to article 9(1), performers have the exclusive right to distribute fixations of their performances until such is sold with the content of the rightholder.

phonogram producers’ related rights

for phonogram producers, the directive mentions they are entitled the right to authorise or prohibit the direct or indirect reproduction of their phonograms under article 7; the right to a single equitable remuneration if the phonogram is published for commercial purposes or reproduced, or is used by for broadcasting by wireless means or for any communication to the public according to article 8(2). the phonogram producers also have the right to distribute their phonograms until such is sold with the content of rightholder according to article 9(1).

related rights for film producers and broadcasting organisation

for film producers, article 7 provides them with the exclusive right to prevent reproduction of their film and its copies. article 9(1) entitles the film producers to have the exclusive distribution right in respect of the original and copies of their film.

for broadcasting organizations, article 6(2) provides they have the exclusive right to authorize or prohibit the fixation of their broadcasts whether these broadcasts are transmitted by wire or over the air, even including by cable or satellite. article 8(3) entitles they have the exclusive right to authorize or prohibit the rebroadcasting of the broadcasts by wireless means, as well as the communication to the public of their broadcast if such communication is made in places accessible to the public against payment of entrance fee. in addition, article 9(1) provides them with the exclusive distribution right. the broadcasting organisations also have the exclusive reproduction right under article 7.

exhaustion of distribution right at the eu level

according to the directive, distribution right is the exclusive right to make available the objects of related rights to the public by sale or other means.

one point should be emphasized in respect of the rule of exhaustion of the distribution right, that is the first sale in any country outside the community does not result in the intra-community exhaustion. where an object has been first sold outside the community, no exhaustion applies to the right within the community, and the distribution right still exists in the community.23 clearly two different exhaustion systems are provided by the directive, these are exhaustion of the distribution rights including all releases into public circulation and non exhaustion of the rental and lending rights.[27]

part iv      problems

despite the significant accomplishments in the preceding part, still some problems may exist, which are addressed as follows:

equitable remuneration: a vague term?

as for unwaivable right to equitable remuneration provided in article 4, the questions may be asked what is the criterion on the equitable remuneration? and whether one time payment is permissive for the payment of equitable remuneration? for the first question, the directive is silent on the criteria on the equitable remuneration; thus, it may make it impossible for it to be enforced properly by member states. in case stichting v netherlandse,[28] although the court held that the concept of “equitable remuneration” must be interpreted uniformly in all member states, it leaves the criterion to each member states to determine the most appropriate one. therefore, different criteria may exist in different member states.

for the second question, recital 16,which relates to article 4, provides that equitable remuneration may be paid on the basis of one or several payments at any time on or after the conclusion of the contract, accordingly, it may be regarded as permitting the equitable remuneration to be met by even one time payment to the author or performer, not taking account of the total revenues from all exploitation acts during the existence of the rental right.[29]however, if one time payment could be permitted, then it would undermine the unwaivable right to equitable remuneration of the author or performer when he or she transfers the rental right to the phonogram or film producer, because the payment may be not equitable for the author or performer due to unexpected success of rental of the work after one time payment[30]. it may be inferred from the mentioned problems that possibly “equitable remuneration” is a vague term.

problem in apportionment of income from rental right

recital 17 states that the equitable remuneration must take account of the importance of the contribution of the authors and performers concerned to the phonogram or film. in fact, a number of different interested parties may have rights in relation to the rental right. these parties include authors of the copyright work, publishers, performers of the work, producer of sound recording, producer of films, director of film and other persons who might be considered to the authors of film. the question may arise as to how the income will be apportioned between these parties. is it proper to be apportioned on a percentage basis? or is it to be done on a numerical basis?  the other question may arise how to decide the importance of contribution of the parties when apportion the income from rental right. is each contributor to be considered equal importance in relation to his or her contribution to the work? if not, how to weight the importance of the contributors to the work? who decides the importance of the contributors so as to apportion the income from the rental right to each contributor?[31]

disadvantage of collecting society

article 4 states that the administration of the right to obtain equitable remuneration may be entrusted to collecting societies representing authors or performers. although this method has advantages, it can create some problems because of its double monopoly. on the hand, the rightholders have to deal with the collecting societies if they want to exploit their works efficiently. it can give rise to discrimination against certain of its members by imposing membership rules or by the adoption of discriminatory royalty distribution rules for works of the rightholders. it surely can put the rightholder in a weaker position when they assign their works to the collective societies. on the other hand, because the users have to go to the collective societies for the use of the works, they could be charged exorbitant royalties[32].

problems with public lending right provisions

article 2(5) mentions only the presumption of transfer of the rental right but not that of the public lending right, although the revenues from lending are more likely to be less than those from rental, the lack of the lending right presumption of transfer makes this right a stronger one in principle to the rental right.[33] secondly, articles 5 leaves member states the most flexible choice for them to make in the adoption of the public lending right, it actually has caused uncertainty on how to legislate on the public lending right .in this way, article 5 is by no means an empty provision[34].

failure of implementation of public lending right

after the implementation of the directive, some problems arose, especially in the area of public lending right. on 16^th,sepetember .2002, the commission issued a report concerning the public lending right.

as the report presents, the directive allows member states to derogate from the exclusive public lending right. however, in this case, authors at least must have the remuneration right. in addition, the directive allows plenty of flexibility including the level of the remuneration to be paid to the rightholders and certain establishments’ exceptions form both the public lending right and the remuneration right. harmonization of the public lending right is important for the internal market since the lending activities can have a great effect on the commercial rental market, especially for music and films. if a video can be borrowed free of charge from the public library, there may be less demand for the rental of the same items. in return it can reduce income for rightholders who are remunerated for the rental of their work. the report says public lending right applied inconsistently across the ec. it concludes that, although the current situation represents an improvement compared to the existing one before the directive, there have been serious delays in implementing the directive. as a result, there is a risk that the public lending right is deprived of adequate effect.[35]

part v      conclusion

the directive is undoubtedly a remarkable step forward in the ec’s attempt to harmonize its regime of rental and lending right and related rights. it provides a solid ground on which the member states in their national laws protect the rental and lending right and related rights in accordance with the copyright principles, in the context of the new developments of the exploitation of the copyright and related rights. at the same time, plenty of flexibilities are provided for the member states by taking account of the different background and culture in the member states.

however, the lack of clarity of some provisions in the directive may undermine the eventual harmonisation, by leading to different understandings in the member states and, consequently, varied adaptation and adoption in their national laws. the failure in enforcing the public lending right exemplifies this salient shortcoming of the directive.

it is never an easy task to harmonize the rental and lending right and related rights at eu level in light of the existing differences in culture and national laws of the member states. further initiatives should be taken to clarify the provisions in the directive, so as to ensure an indisputable understanding of the directive and, consequently, the same level of implementation in all member states. the commission and the courts should take its responsibility to explain the directive in a rational way.

bibliography

books

1.bainbrige, intellectual property, longman, 5^th ed.2001

2.holyoak & torremans , intellectual property law ,butterworths, 3^rd ed. 2001

3.reinbothe & lewinski, the ec directive on rental and lending rights and on piracy, sweet & maxewell, 1^st ed.1993

4.prime t, european intellectual property law, ashagate, 2000

legislation and green paper

council directive92/100/eec of 19 november 1992 on rental and lending right and on certain rights related to copyright in the field of intellectual property, oj (1992) l346/61.

green paper on copyright and the challenge of technology-copyright issues requiring immediate action, com (1988) 172 final

report

report from the commission to te council, the european parliament and the economic and social committee on the public lending right in the european union, com (2002) 502

journal articles

1.freegard, ‘collective administration’, (1985) copyright 443

2.mosawi,’some implications of the new regulations regarding rental rights’, 1995 ent.l.r. 307

3.murry, ‘fighting piracy: the eu rental rights proposal”’1992 ent .l .r 148

4.henry, ‘rental and duration directives: issues arising from current ec reforms’, 12 (1993) eipr 437

5.lewinski, ‘rental rights, lending rights and certain neighbouring rights: the ec commission’s proposal for a council directive’, 4 (1991) eipr

6.pinto, ‘exhaustion of copyrights in the european union: a special focus on portugal’, 2000 ent.l.r.14

7.reinbothe &lewinski ,’the ec rental directive one year after its adoption: some selected issues’ 1993 ent.l.r.169

8.weightman, ‘european commission: copyright and performers’ right’,1993 eipr 16

table of cases

1.case158/86, warner bros inc v christiansen  [1988] ecr 2 605

2.case c-245/oo, stichiting ter exploitie van naburige rechten v netherlandse omroep stichiting [2003] (judgement of the court of 6 february 2003)